State Senator's Role in Grants Is Said to Be Before Grand Jury

By RICHARD PÉREZ-PEÑA

Published: October 4, 2002

ALBANY, Oct. 3—
Prosecutors here are conducting a grand jury investigation into State Senator Pedro Espada Jr.'s attempt to award $745,000 in no-bid state grants to a social service group he heads, officials involved in the inquiry said today.

The officials said the Albany County district attorney's office had subpoenaed records from the Senate office of Mr. Espada, of the Bronx, and the organization he founded, Comprehensive Community Development Corporation. They said the inquiry was prompted by an article last July in The New York Times that revealed the grants and Mr. Espada's role in them.

District Attorney Paul A. Clyne said he could not confirm or deny that there was an investigation. But, he said, ''On the face of what was published in The New York Times, it stinks to high heaven. It's obscene.''

Mr. Espada and a spokesman did not return calls seeking comment on the investigation.

Ordinarily, the state awards money to private groups only after a competitive process in which various contenders submit bids or proposals. But each year, the legislators get sole discretion to distribute some money as ''member items,'' as each sees fit -- to schools, hospitals or cultural groups, for instance.

The state budget enacted in May included three member items worth a total of $745,000 to Mr. Espada's group, which runs health clinics in the Bronx under the name Soundview Health Center. That was the second-largest amount directed to any single organization through member items.

When asked in July about the grants, Mr. Espada at first denied that they were member items and that he had anything to do with them, which he said ''would be very wrong.'' Two days later, he admitted that they were member items, awarded at his request, but insisted that he had done nothing wrong. He said he was not involved in the daily operation of the organization, though he is its president and collects a salary of more than $200,000 a year.

Senate officials confirmed that the grants were Mr. Espada's member items. They said they were unaware of his connection to the organization until The Times inquired, after which they withdrew the grants because they violated Senate policy.

Experts on the state's ethics laws said that the member items posed an obvious conflict of interest, but that it was less clear whether they violated the Public Officers Law or any other statute.

Mr. Espada announced in February that he was becoming a Republican, joining the Senate's majority party. Among other benefits, this move increased his allotment of member item money roughly tenfold. He joined the Republicans' private conferences and began voting with them, but he remained a registered Democrat.

The Bronx Democratic organization tried and failed to strip him of his party registration, to prevent him from entering the Democratic primary for his seat. He apparently lost that election narrowly to City Councilman Ruben Diaz last month, but he has challenged the result in court and a ruling is pending.

A spokesman for the Senate Republicans, John McArdle, said that any investigation should include Democratic legislators, like Assemblyman Vito J. Lopez of Brooklyn, whose outside business interests have also raised ethical questions.